WASHINGTON - Two Miami-area corporations, American Therapeutic Corporation (ATC) and Medlink Professional Management Group Inc., pleaded guilty today in U.S. District Court in Miami for a fraud scheme that resulted in the submission of more than $200 million in fraudulent claims to Medicare, the Departments of Justice and Health and Human Services (HHS) announced.
According to court documents, ATC is a Florida corporation headquartered in Miami that operated purported partial hospitalization programs (PHPs) in seven different locations throughout South Florida and Orlando, Fla. A PHP is a form of intensive treatment for severe mental illness. Medlink is a Florida corporation headquartered in Miami that purported to act as a “management company” for health care businesses. In reality, ATC and a related company, the American Sleep Institute (ASI), were Medlink’s only clients. ATC and Medlink are each charged with conspiracy to commit health care fraud in a superseding indictment unsealed on Feb. 15, 2011. ATC is also charged in the superseding indictment with health care fraud and conspiracy to defraud the United States and to pay and receive illegal health care kickbacks.
“ATC and Medlink, and their owners, have now pleaded guilty to perpetrating a massive $200 million Medicare fraud scheme in South Florida,” said Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division. “The fraud scheme was staggering in scope, and those who concocted the scheme exhibited a complete disregard for the elderly, infirm and disabled victims who were used to commit it. Today’s guilty pleas mark an important step forward in our effort to hold accountable everyone -- and every entity -- involved in the scheme, and to recover the maximum amount possible on behalf of American taxpayers.”
“The defendants altered patient files, diagnoses and medication types and levels to make it appear that patients being treated qualified for PHP treatments,” said U.S. Attorney Wifredo Ferrer for the Southern District of Florida. “This was done so that the defendants could fraudulently bill Medicare for more than $200 million in medically unnecessary services. We are pleased to have put these unscrupulous operators out of business.”
“No matter what the scheme or how elaborately it was disguised, personal and corporate greed by these two corporations and their owners defrauded taxpayers of millions of dollars,” said Special Agent in Charge John V. Gillies of the FBI’s Miami Field Office. “Ultimately, health care fraud robs from the elderly and disabled.”
“ATC and Medlink shared a common business model: the systematic defrauding of American taxpayers. Now these companies are out of business and they’ll pay for their crimes.” said Daniel R. Levinson, HHS Inspector General. “Investigators from my office will continue to keep the heat on health care criminals whose victims are the most vulnerable in society.”
Marianella Valera, the president of ATC, and Lawrence S. Duran, the president of Medlink, entered the pleas on behalf of the two corporations before Magistrate Judge Barry L. Garber in Miami. Valera and Duran each pleaded guilty on April 14, 2011, to all counts charged against them individually in the superseding indictment. The superseding indictment charged Duran with 38 felony counts and Valera with 21 felony counts, including conspiracy to commit health care fraud, health care fraud, conspiracy to pay and receive illegal health care kickbacks, conspiracy to commit money laundering, money laundering and structuring to avoid reporting requirements.
In pleading guilty on behalf of the companies, Duran and Valera admitted that the corporate entities together, and along with individuals, executed a scheme to defraud Medicare beginning in 2002 and continuing until they were arrested in October 2010. Duran and Valera also admitted that they used ASI to submit fraudulent Medicare claims.
Specifically, according to the superseding indictment, Duran, Valera and others caused the alteration of patient files and therapist notes for the purpose of making it appear, falsely, that patients being treated by ATC qualified for PHP treatments. According to court documents, Duran and Valera also instructed employees and doctors to alter diagnoses and medication types and levels to make it falsely appear that ATC patients qualified for PHP services. The superseding indictment also charges that Duran, Valera and their co-conspirators caused doctors to refer ATC patients to ASI even though the patients did not qualify for sleep studies.
According to court filings, Duran, Valera and others paid kickbacks to owners and operators of assisted living facilities (ALFs) and halfway houses and to patient brokers in exchange for delivering ineligible patients to ATC and ASI. In some cases, the patients received a portion of those kickbacks. The defendants and their co-conspirators actively recruited ALF and halfway house owners and operators and patient brokers to participate in this kickback scheme. Throughout the course of the ATC and ASI conspiracy, millions of dollars in kickbacks were paid in exchange for Medicare beneficiaries, who did not qualify for PHP services, attending treatment programs that were not legitimate PHP programs. This was done so that ATC and ASI could bill Medicare for more than $200 million in medically unnecessary services.
According to court documents, Duran, Valera and others used Medlink to conceal the health care fraud and kickbacks from Medicare and law enforcement. Once Medicare paid ATC and ASI for the fraudulently billed services, Duran, Valera and others transferred millions of dollars to Medlink. The superseding indictment and a related indictment charge individuals, including Duran and Valera, with using Medlink to distribute those millions of dollars to shell corporations and individuals with the purpose of laundering the money into cash to pay kickbacks.
Sentencing for the two corporations is scheduled for July 13, 2011, at 9:30 a.m. The two corporations, which have been out of business since the arrests of their owners in October 2010, face maximum financial penalties of more than $80 million, the amount paid by Medicare as a result of this scheme. The corporations’ assets were frozen in October 2010 through civil forfeiture proceedings.
Co-conspirator Margarita Acevedo, also charged in the February 2011 superseding indictment, pleaded guilty on April 7, 2011, for her role in the fraud scheme. Trial against a fourth individual charged in the superseding indictment, Judith Negron, is scheduled to begin Aug. 1, 2011. An indictment is merely an allegation and a defendant is presumed innocent until proven guilty beyond a reasonable doubt in a court of law.
Today’s guilty pleas were announced by Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida; John V. Gillies, Special Agent-in-Charge of the FBI’s Miami field office; and Special Agent-in-Charge Christopher Dennis of the HHS Office of Inspector General (HHS-OIG), Office of Investigations Miami office.
The criminal case is being prosecuted by Trial Attorneys Jennifer L. Saulino and Joseph S. Beemsterboer of the Criminal Division’s Fraud Section. The related civil action is being handled by Vanessa I. Reed and Carolyn B. Tapie of the Justice Department’s Civil Division and Assistant U.S. Attorney Ted L. Radway of the Southern District of Florida. The case was investigated by the FBI and HHS-OIG, and was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Southern District of Florida.
Since its inception in March 2007, Medicare Fraud Strike Force operations in nine locations have charged more than 1,000 defendants who collectively have billed the Medicare program for more than $2.3 billion. In addition, HHS’s Centers for Medicare and Medicaid Services, working in conjunction with the HHS-OIG are taking steps to increase accountability and decrease the presence of fraudulent providers.
To learn more about the Health Care Fraud Prevention and Enforcement Action Team (HEAT), go to: www.stopmedicarefraud.gov .